This textbook includes everything needed to gain a clear understanding of managerial accounting in a hospitality setting. The new edition reflects changes to taxes in 2010 and updated operating statistics. It also has new sections on revenue management and dynamic pricing, accounting for gift cards, unsecured bank loans, and profitability indexes. Information on the Uniform System of Financial Reporting for Clubs has been added for comparison to current information on hotels and restaurants. Each chapter also features three new problems to challenge your understanding of accounting.

Learn to:

  • Make effective choices based on the numbers that affect daily operations
  • Develop on-target budgets and control cash flow
  • Reach profit goals with the help of financial reports and other tools
  • Apply the latest uniform systems of accounts for hotels and restaurants



Prerequisites: Students should already be familiar with basic accounting concepts and procedures, or have taken an introductory course in basic accounting.

Course Description: This course presents managerial accounting concepts and explains how they apply to specific operations within the hospitality industry.

Objectives: At the completion of this course, students should be able to:

  • State the purposes, contents, and limitations of the balance sheet, and analyze balance sheets using both horizontal and vertical analysis
  • State the purposes, contents, and limitations of the income statement, and analyze income statements using both horizontal and vertical analysis
  • Understand and use the most current version of the uniform system of accounts applicable to the lodging industry
  • State the purposes, contents, and limitations of the statement of cash flows (SCF), and prepare an SCF
  • Use ratio analysis to interpret information reported on financial statements and reports, as well as understand how the interpretation of ratio results varies among owners, creditors, and managers
  • Understand basic cost concepts such as fixed, variable, and mixed costs, as well as calculate the fixed and variable elements of mixed costs
  • Perform a breakeven analysis and use cost-volume-profit analysis to determine the revenue required at any desired profit level
  • Use cost approaches to pricing both rooms and food and beverage items
  • Forecast activity levels by using both qualitative and quantitative forecasting methods
  • Prepare an operations budget and analyze variances of actual results from budgeted plans
  • Manage a hospitality operation’s cash balances, cash flow, and short-term investments in securities, as well as manage an operation’s working capital
  • Implement basic internal control techniques for various accounting functions such as cash receipts, cash disbursements, accounts receivable, accounts payable, payroll, inventories, fixed assets, and marketable securities
  • Use various capital budgeting models such as the accounting rate of return model, payback model, net present value model, and the internal rate of return model

Group Teaching Guidelines: This course has 15 chapter sessions. (Note, however, that the Final Exam covers only the first 13 chapters.) Alternative course designs are quite feasible given that each session is a self-contained unit which can easily be broken down into subsections. Because the course emphasizes a practical approach to managerial accounting, much of the class time is taken up with exercises and problems relating to specific operations in the hospitality industry. Solutions to all problems that appear at the end of each chapter of the textbook are found at the back of the Instructor’s Guide for the course.

Evaluation: The student must a comprehensive final examination covering chapters 1-13.

Learning Resource: Hospitality Industry Managerial Accounting, Seventh Edition, by Raymond S. Schmidgall, Ph.D., CPA.